Tech Stocks Lead a Vibrant Market As Investors Cast Caution Aside

By The Associated Press

May 12, 2014

The stock market returned to record levels on Monday as investors regained their appetite for riskier stocks.

After beating down Internet shares and those of small companies for two months, investors decided that these stocks had fallen enough. Among the big gainers were Twitter and Facebook, which plunged in March and April. The Russell 2000, an index made up of small companies, experienced its largest gains in two months.

Investors have been more cautious this year than last, favoring big, less volatile stocks that pay rich dividends, because of concerns about the outlook for the economy. Utility and energy companies have been among the beneficiaries of this trend, and have outperformed the overall market in 2014.

While interest rates remain low, investors are likely to keep being drawn back into stocks after any sell-off because holding cash isn’t generating any returns, said Tim Courtney, chief investment officer at Exencial, an independent wealth management company.

“There is some bargain buying in some of the names that got hit hard in March and April,” Mr. Courtney said.

On Monday, the Standard & Poor’s 500-stock index rose 18.17 points, or 1 percent, to finish at a nominal record high of 1,896.65. The index last did so on April 2, when it reached 1,890.90.

The Dow Jones industrial average gained 112.13 points, or 0.7 percent, to end at a nominal record high of 16,695.47. The Dow previously set a record on Friday.

The Nasdaq composite index climbed 71.99 points, or 1.8 percent, to 4,143.86, still well below the highs it reached during the dot-com boom in 2000.

The Russell 2000 index rose 26.4 points, or 2.4 percent, to 1,133.65, its biggest gain since March 4. The index slumped almost 10 percent from March 4 to May 9 as investors sold riskier stocks. The index still remains down 2.6 percent for the year after surging 37 percent in 2013.

Gains on Monday were led by technology and industrial companies, sectors that are expected to benefit most if the economy starts growing faster.

Facebook shares rose $2.59, or 4.5 percent, to $59.83, reducing the stock’s decline since March 10 to 17 percent. Twitter, another stock that has been beaten down recently, rose $1.89, or 5.9 percent, to $33.94.

Stocks also got a boost from some merger news. Shares of Pinnacle Foods surged $4.02, or 13.2 percent, to $34.47 after the company agreed to be acquired by Hillshire Brands. Pinnacle’s brands include Duncan Hines and Aunt Jemima, while Hillshire makes Jimmy Dean and Sara Lee products. Hillshire shares fell $1.19, or 3.2 percent, to $35.76.

Even though stocks have remained largely unchanged for most of the year following a surge in 2013, investors are still more concerned about missing the next leg of a rally than a market fall, said Douglas Coté, chief market strategist at Voya Investment Management.

In the bond market, interest rates rose modestly. The yield on the 10-year Treasury note climbed to 2.66 percent, from 2.62 percent late Friday, while its price fell 11/32, to 98 19/32.

A version of this article appears in print on , on Page B5 of the New York edition with the headline: Tech Stocks Lead a Vibrant Market as Investors Cast Caution Aside. Order Reprints | Today’s Paper | Subscribe